The Responsible Corporate Officer Doctrine

The Responsible Corporate Officer (RCO) doctrine imposes strict liability on high ranking corporate officers for the wrongdoings of their companies regardless of fault. This means that prosecutors are not required to establish that an officer had actual knowledge of a crime in order to prosecute him or her for it. Federal prosecution for a white collar crime can have devastating consequences, even for those who were unaware of their company’s wrongful actions, so if you own a company in south Florida and are being investigated for a white collar crime, it is important to speak with an experienced white collar crime attorney who can help you formulate a defense.

The Evolution of the RCO Doctrine

Based on the reasoning that executives have a heightened degree of responsibility within their companies, courts have used the RCO doctrine to hold a number of corporate officers liable for white collar crimes committed by others within their companies. For example, in one case, dating from 1975, the Supreme Court explained that because the pharmaceutical industry directly affects the safety of the public health, pharmaceutical companies and their officers must exercise a high degree of supervision over the workings of their companies. For this reason, a drug manufacturer could be prosecuted for his company’s violations of the federal Food, Drug, and Cosmetic Act even though he had no knowledge that the drugs were adulterated or misbranded. The court reasoned that because the officer was in a position to prevent or correct the activity, he could ultimately be held responsible for a failure to do so.

The doctrine was upheld thirty years later when the president of a large grocery store chain was held liable for failing to end a rat infestation in one of its food warehouses. Although the president had delegated this responsibility to another employee, the court concluded that regardless of the officer’s lack of involvement in the activity, he could be held responsible for failing to exercise the appropriate supervisory authority. More recently, the Justice Department has used the doctrine to prosecute executives for environmental crimes committed by their companies.

Who can be Prosecuted?

While most RCO prosecutions involve industries that are regulated by the Food and Drug Administration (FDA) or the Environmental Protection Agency (EPA), any corporate officer who operates a business in a regulated industry could be prosecuted under the RCO doctrine. However, companies in certain industries are more at-risk than others, including:

Pharmaceutical companies;

Compounding pharmacies;

Medical device manufacturers;

The retail food industry; and

The agricultural sector of the food industry.

To avoid being prosecuted for fraud committed by employees, executives should avoid delegating to junior employees as courts are not swayed by the defense of a lack of knowledge. Furthermore, executives who manage companies that affect the public welfare should be careful to actively ensure that they are complying with federal regulations.

Contact an Experienced White Collar Crime Lawyer

Under the RCO doctrine, corporate officers who were completely unaware of a fraudulent activity committed by an employee could face criminal charges. If your company is being investigated for a regulatory violation, please contact Jeffrey S. Weiner, P.A., Criminal Defense Attorneys today for professional legal help.

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